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RBI allows banks to lend more to some NBFCs

This will be in addition to the existing FALLCR of 13 per cent of total deposits, and limited to 0.5 per cent of the bank's total deposits. Liquidity coverage ratio refers to highly liquid assets that financial institutions need to hold in order to meet short-term obligations.

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  • RBI allows banks to lend more to some NBFCs
    2018-10-19, By: System Administrator

    RBI allows banks to use government securities equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, to be used to meet liquidity coverage ratio requirements
    The Reserve Bank Friday announced more measures to increase liquidity flows to the non-banking financial companies. The RBI permitted banks to use government securities equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, to be used to meet liquidity coverage ratio requirements.

    The move will help provide liquidity to housing finance companies (HFCs) and non-banking finance companies (NBFCs) which have come under pressure following series of default by IL&FS group companies." banks will be permitted to also reckon Government securities held by them up to an amount equal to their incremental outstanding credit to NBFCs and HFCs, over and above the amount of credit to NBFCs and HFCs outstanding on their books as on October 19, 2018, as Level 1 HQLA under FALLCR within the mandatory SLR requirement," RBI said in a notification.

    This will be in addition to the existing FALLCR of 13 per cent of total deposits, and limited to 0.5 per cent of the bank's total deposits. Liquidity coverage ratio refers to highly liquid assets that financial institutions need to hold in order to meet short-term obligations.

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